“The leads are weak.”
In an average B2B company, 15% to 80% of closed annual revenue is aided through teleprospecting efforts, which could either be a sales or marketing function. Outbound leads are more challenging than inbound leads to pursue and/or close, so there may be different compensation schemes associated with each.
According to Bridge Group, over 50% of these organizations report into marketing, so I’m going to briefly describe this situation with the structure reporting into marketing. For inbound leads, here are four ways to compensate a teleprospecting or inside sales function:
- On closed revenue – a purist viewpoint would have only leads that actually turn into revenue get compensated on. This is likely the most difficult to implement as an approach but the concept is correct – compensate on quality, not quanity of leads.
- On lead quantity – this compensation scheme is seen typically in organizations that lack sales and marketing alignment, mostly in larger organizations. It provides a false sense of security around quantity rather than quality. Marketing in this kind of organization is rewarded for activity vs. impact.
- On sales accepted lead – better model to consider as now there is a quality filter in place and a more formal handoff between sales and marketing. Some teleprospecting functions may balk at this as they have no control over what is accepted. However, this compensations scheme forces a very tight alignment between sales and marketing around definitions and structure, a net benefit to the company.
- A combination of lead quantity and sales accepted lead – this model rewards alignment between sales and marketing yet also seems fair to the teleprospector generating a quantity of leads. This would be a recommended model from my viewpoint.
There are so many other factors to also consider when creating a comp plan – the first of which is to make sure both the head of sales and head of marketing have some common understanding of the comp plan as well as the percentage of time spent on outbound calls. Lastly, when factoring the return on investment of a teleprospector, there is a significant opportunity cost of NOT having this function in place – meaning, a sales person would have to spend their valuable time qualifying leads without this function in place. That in and of itself can justify the ROI of making the investment in this function. There is also a tradeoff of lead quality vs. quantity which is a function of cost – more leads can be handed to sales at a lower cost, but the quality may suffer. A higher lead quality can be passed over at a higher cost with tighter qualification methods.
What have you found most effective in compensating your teleprospectors?